Republicans to boycott committee vote on Biden Fed nominees

Republicans are expected to boycott a Senate Banking Committee meeting Tuesday afternoon as they level ethics allegations at one of President Biden's Federal Reserve nominees, which Democrats say are baseless and unfair.

Republicans are accusing Fed vice chair of supervision nominee Sarah Bloom Raskin of influence peddling after leaving a post in the Obama administration. Raskin, the White House, the Kansas City Fed the company she's accused of using her influence to assist all strenuously deny the allegation. 

A boycott could also affect Federal Reserve Chairman Pro Tempore Jerome Powell, who is up for another term in his post. Other nominees who were expected to get votes were Fed vice chair nominee Lael Brainard, Fed governor nominee Phillip Jefferson, and Fed governor nominee Lisa Cook.

"Committee Republicans aren’t seeking to delay her vote. We’re seeking answers," Banking Committee ranking member Pat Toomey, R-Pa., said Tuesday. "Until basic questions have been adequately addressed, I do not think the committee should proceed with a vote on Ms. Raskin."

Because of the 50-50 split in the Senate, committees are also allocated evenly along party lines. That means if all 12 Republicans on the panel don't show up, the committee can't hold a vote. 

Committee Chairman Sherrod Brown, D-Ohio, Tuesday said in boycotting the markup, "Toomey chose to abdicate his duty to the American people and put our economic recovery at risk, instead of doing his job and showing up to vote on Ms. Bloom Raskin, Dr. Cook, Dr. Jefferson, Gov. Brainard, and Chair Powell’s nominations."

White House Press Secretary Jen Psaki said "some Senate Republicans are playing politics with the American economy by blocking a vote on the Chairman of the Federal Reserve and an entire slate of well-qualified nominees. Such an extreme step would be totally irresponsible at a time when it’s never been more important to have confirmed leadership at the Fed to help continue our recovery and maintain price stability."

Republican Sen. Jerry Moran told FOX Business' Stuart Varney that committee Republicans told Brown they are prepared to move forward on every nominee except Raskin, and that if she is not removed from the agenda today, GOP members will boycott.

Republicans allegations against Raskin are centered on her work for Reserve Trust, a state-chartered trust company in Colorado. Raskin started there after working as a Fed governor from 2010 to 2014, and in the Treasury Department from 2014 to 2017. 

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Reserve Trust was denied a coveted "master account" with the Fed in 2017. But after Raskin came on as a board member for Reserve Trust she lobbied the Kansas City Federal Reserve to approve the account, Republicans allege. It was approved the next year in 2018. 

"While it may be routine for your average company director to call a regional Fed bank, there is nothing routine about a former Fed Governor, like Ms. Raskin, calling the president of a regional Fed bank, with whom she previously served on the Fed’s Federal Open Markets Committee, about such a decision," Toomey said in a letter to the Kansas City Fed last week. 

"Something doesn't smell right with the way this played out," Sen. Cynthia Lummis, R-Wyo., said in Raskin's hearing earlier this month. 

White House spokesman Mike Gwin hit back against the implication that Raskin may have used her influence improperly. 

Because RTC did not meet the definition of a depository institution, the Kansas City Fed determined RTC was not eligible for a Fed master account… After this denial, RTC changed its business model… in a manner that meant RTC met the definition of a depository institution. Because of these changes… the Kansas City Fed approved the RTC request for a master account in mid-2018.

- Statement from the Kansas City Federal Reserve

"Sarah Bloom Raskin has committed to the strictest ethics requirements in history of any Federal Reserve Board nominee," Gwin said. "Senator Toomey has waged a baseless smear campaign for weeks against an exceptionally well-qualified nominee without providing a single scrap of evidence to support his false claims, and his allegations have already been refuted by the Kansas City Federal Reserve Bank and the founder of Reserve Trust."

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Indeed, the Kansas City Fed said in a statement last week that the reason Reserve Trust's second master account application was approved was not because of Raskin but because of structural changes at Reserve Trust. 

"Because RTC did not meet the definition of a depository institution, the Kansas City Fed determined RTC was not eligible for a Fed master account. As a result, the request was denied in mid-2017," the Kansas City Fed said in a statement. 

"After this denial, RTC changed its business model and the Colorado Division of Banking reinterpreted the state’s law in a manner that meant RTC met the definition of a depository institution,'" it continued. "Because of these changes, and following a review of other risk-based factors relevant to the decision, the Kansas City Fed approved the RTC request for a master account in mid-2018."

Dennis Gingold, the former chairman of Reserve Trust, called the GOP allegations against Raskin "completely false." And Raskin herself said she believes "Reserve Trust received a master account on its merits, after complying with all applicable rules and regulations, including governing Colorado banking statutes."

Raskin also said she doesn't "recall any communications I made to help Reserve Trust obtain a master account," despite the fact Toomey wrote that Kansas City Fed President and CEO Esther George told him the pair spoke. 

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Raskin said any such communications would comply with ethics rules if they did happen. 

Toomey spokesperson Amanda Thompson said it's "not surprising" Gingold would go to bat for his former colleague. And she accused the Kansas City Fed of stonewalling requests for information about the process behind how Reserve Trust's master account was approved. 

"We’re pleased the KC Fed is acknowledging the phone call from Ms. Raskin on behalf of Reserve Trust," Thompson said. "If what the KC Fed says is true, then it should have no problem turning over the requested information since it could corroborate the KC Fed claim that the application was approved because of a change in circumstances and not because of Ms. Raskin’s influence campaign."

Republicans are also accusing Raskin of violating the spirit of an Obama-era ethics pledge which says officials should not leave the federal government and immediately turn around to lobby officials for separate interests. 

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The pledge's language notably says that commitment ends at the end of the Obama administration – which was not in power when Reserve Trust got its master account. And Raskin had been out of her Federal Reserve post for years by the time she worked there. But that she was just a few months out of her Treasury post when she allegedly coordinated with the Kansas City Fed on Reserve Trust's master account appears indecorous, according to Republicans. 

"The fact that the White House felt it necessary to impose ‘the most strict and robust ethics pledge in history’ on Ms. Raskin is an implicit admission of her past unseemly use of the Washington revolving door," Thompson said. 

But former Obama White House ethics czar Norm Eisen said in a statement he thinks Raskin did nothing wrong. 

"There is no there there. Based on what we know I don’t think the contact with the KC Fed violated any ethics rules," Eisen said. "Frankly the hypocrisy is stunning by some of those complaining who let pass conduct in the previous administration that did implicate ethics rules, and seriously so."

FOX Business' Edward Lawrence contributed to this report.